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Friday, 31 October 2014

State-backed Royal Bank of Scotland (RBS.L) has set aside 400 million pounds ($640 million) to cover potential fines for manipulating currency markets and warned further charges for past misconduct would continue to hit its profits.

RBS, 80 percent-owned by the British government following a 45 billion pound bailout during the financial crisis of 2007 to 2009, on Friday joined other big rivals in signaling it is close to agreeing settlements over alleged manipulation of the $5.3 trillion-a-day foreign exchange market.

Rival Barclays (BARC.L) said on Thursday it had set aside 500 million pounds to cover potential FX fines, while JP Morgan (JPM.N), UBS (UBSN.VX) and Citi (C.N) have also set aside large sums.

The forex manipulation, revealed after banks were already under scrutiny for profiteering in the setting of benchmark lending rates such as Libor, relates to daily fixing rates which traders are alleged to have manipulated to suit their own market positions.

RBS also faces a number of other probes relating to past misdeeds which threaten to undermine its turnaround under Chief Executive Ross McEwan, who has steered the bank back into profit this year after it made a loss of 8.2 billion pounds in 2013.

"We are actively managing down a slate of significant legacy issues. This includes significant conduct and litigation issues that will continue to hit our profits in the quarters ahead," McEwan told reporters on Friday.

RBS is being investigated by regulators looking into its selling of bonds backed by residential mortgages in the United States and its treatment of struggling small British firms. The bank is also expected to be fined by British financial regulators for an IT failure two years ago which left customers without access to their bank accounts.

In addition, RBS faces a mounting bill to compensate customers mis-sold loan insurance. It set aside another 100 million pounds to deal with the matter on Friday, taking its total bill to 3.3 billion pounds.

(Reuters) - Japanese stocks soared 4.8 percent to their highest close since November 2007 and the yen skidded to near seven-year lows against the dollar on Friday, after the Bank of Japan surprised markets with fresh easing steps it called a pre-emptive move to stoke inflation.

The Nikkei stock average marked its biggest one-day gain since June 2013 after Japan's central bank said it would purchase more shares of exchange-traded funds and real estate investment trusts, extend the duration of its portfolio of Japanese government bonds, and increase the pace at which it expands base money to "pre-empt manifestation" of risks.

The buoyant mood was likely to carry over to Europe, where financial spreadbetters expected Britain's FTSE 100 to open 54 points higher, or up 0.8 percent; Germany's DAX to open 95 points higher, or up 1 percent; and France's CAC 40 to open 43 points higher, or up 1 percent.

S&P e-mini futures jumped 1.1 percent to test September's record high, and the yield on benchmark U.S. Treasury notes rose to 2.347 percent from the U.S. close of 2.305 percent on Thursday.

The dollar was buying 111.06, up about 1.7 percent on the day after rising as high as 111.18 yen, its highest since January 2008.

"It was a total surprise that the BOJ eased further at this time given that BOJ executives have not voiced such pessimistic views lately. The move was apparently made in response to underlying weakness in prices," said Junko Nishioka, chief economist at RBS Securities Japan.

"I think the move will be effective as it prompted a sharp drop in the yen. That will help boost import prices, which will in turn help bring inflation closer to the BOJ's target," she said.

After the Nikkei closed, the BOJ released its latest semiannual outlook and slashed in half its economic forecast for the current fiscal year to 0.5 percent, after demand weakened in the wake of a sales tax hike in April.

BOJ Governor Haruhiko Kuroda told reporters on Friday that there was still room for further easing if needed, but the central bank believed Friday's steps were sufficient.

Before the BOJ's surprise, markets were cheered by Wall Street's surge late in Thursday's session after news of surprisingly strong third-quarter U.S. economic growth as the trade gap narrowed. But domestic demand slipped, hinting at some loss of momentum.

The data came a day after the U.S. Federal Reserve surprised markets with an optimistic assessment of the U.S. economy when it announced the end of its monthly bond buying stimulus program.

Japan's outperformance boosted shares outside of Japan, with MSCI's broadest index of Asia-Pacific shares outside Japan adding 0.8 percent, putting it on track for weekly and monthly gains of more than 2.5 percent.

Japanese shares also got a lift from news that Japan's Government Pension Investment Fund is poised to approve allocation targets which aim to raise the portion of Japanese shares in its portfolio to 25 percent from the current target of 12 percent, two government sources said.

"The consensus was that GPIF would go to 20 percent Japanese stocks. The impact of 25 percent will be strong, with a positive impact for stocks," said Masayuki Doshida, senior market analyst at Rakuten Securities in Tokyo.

But data released before the market open showed Japan's jobless rate rose in September and the availability of jobs fell for the first time in more than three years, suggesting the labor market is starting to lose some momentum. Japanese household spending also fell more than expected in September.

Popular cross-trades, involving purchases of higher yielding currencies against the yen, soared after the BOJ easing, with Australian dollar rising 1.5 percent and the New Zealand dollar gaining 1.6 percent against the yen.

The euro dropped 0.3 percent to $1.2574.

In commodities trading, spot gold dropped about 1 percent to $1,186.70 an ounce.

Thursday, 30 October 2014

Deutsche Bank AG (DBKGn.DE) made a net loss in the third quarter after falling victim to the legal costs which earlier this week prompted a management reshuffle designed to help tackle a long list of unresolved litigation issues.

Germany's top lender has stumped up around 7 billion euros ($8.9 billion) in fines and charges since 2012, overshadowing management efforts to restructure and reform the bank and making its stock one of the worst performers in the European sector so far this year.

The bank, which in June raised 8.5 billion euros to strengthen its balance sheet, originally hoped to clear the decks of legal issues in 2014, but has postponed that target to 2015. "There continues to be significant uncertainty about the timing and size of potential impacts" of litigation, Chief Finance Officer Stefan Krause said.

Its shares closed 2.4 percent lower, contributing to a 28 percent fall so far this year and placing the bank just a notch ahead of National Bank of Greece (NBGr.AT) in performance rankings in the STOXX Europe 600 index of European banks .SX7P.

Deutsche Bank also sounded a note of caution on some of its revised 2015 profit goals after spending 894 million euros on litigation in the quarter, saying conditions remained challenging in several areas including "transaction" banking, or the provision of money transfers, trade finance and treasury services to corporations.

Signaling it had not done enough to resolve a long list of lawsuits and investigations in areas such as the setting of benchmark interest rates, the bank had said on Tuesday it was reorganizing its management board and had created a new role focused on legal issues, to be taken by audit head Christian Sewing.

Separately on Wednesday, in a sign Deutsche is attempting to clear the decks, the bank agreed to settle a long-running dispute with four traders it had fired, ending an embarrassing chapter in which the bank was accused of management lapses that led to attempts to manipulate reference interest rates.

"We aim to resolve these (issues) as soon as possible," co-Chief Executive Officer Anshu Jain said on a conference call.

Deutsche also named Marcus Schenck, a London-based Goldman Sachs (GS.N) investment banker and former finance chief of German energy group E.ON (EONGn.DE), to replace CFO Krause, who will take on a new board seat in charge of strategy.

FURTHER PENALTIES

The bank is two years into a turnaround plan that has led to costs falling and operating profit rising, but the threat of further penalties from alleged misconduct has cast a shadow over its share price and management's success claims.

Investigators are looking into possible attempts at interest-rate and forex-benchmark manipulation, high-frequency trading, possible violations of U.S. sanctions on Iran and other activities.

"Deutsche Bank hasn't achieved the level of profitability that it set out to achieve, and whether it can reach its targets by 2016 seems doubtful at the moment," said fund manager Helmut Hipper at Union Investment.

Deutsche fell to a quarterly net loss of 92 million euros from a 51 million profit in the year-earlier period, while net revenue increased a modest 2 percent.

(Reuters) - U.S. stocks closed with slight losses on Wednesday, finishing off their lows of the session, after the Federal Reserve ended its stimulative monthly bond-buying program and expressed confidence in U.S. economic prospects.

Major indexes were volatile following the central bank's statement, with the S&P 500 down as much as 0.8 percent before pulling back. Material shares .SPLRCM were lower throughout the session, a decline in Facebook pressured the Nasdaq, but strength in energy and financial shares helped the market recover.

In a statement after a two-day meeting, the Fed ended its quantitative easing program of bond purchases, as had been expected. At its peak, the program pumped $85 billion a month into the financial system. The Fed also dropped a characterization of U.S. labor market slack as "significant" in a show of confidence in the economy's prospects.

"The Fed had a little more of a hawkish bent than the market expected, but any weakness that came from the statement was obviously viewed as a buying opportunity," said Alan Gayle, director of asset allocation at RidgeWorth Investments in Atlanta, Georgia.

The Dow Jones industrial average .DJI fell 31.44 points, or 0.18 percent, to 16,974.31, the S&P 500 .SPX lost 2.75 points, or 0.14 percent, to 1,982.3 and the Nasdaq Composite .IXIC dropped 15.07 points, or 0.33 percent, to 4,549.23.

Material shares .SPLRCM fell 1.3 percent after DuPont (DD.N) said there were "competitive advantages" to keeping its businesses together. Activist investor Nelson Peltz has urged DuPont to separate its various businesses in a move that has supported the company's shares. Shares of DuPont lost 1.7 percent to $66.80.

Facebook Inc (FB.O) fell 6.1 percent to $75.86 the day after the social network announced an increase in spending in 2015 and projected a slowdown in revenue growth this quarter.

After the market closed, shares of Visa Inc (V.N) rose 3.6 percent to $222.40. Visa reported its fourth-quarter results and announcing a stock buyback program of $5 billion.

Despite the turn lower, equities mostly held onto recent gains, with the S&P 500 up 6.4 percent over the last nine sessions as earnings have mostly been strong. So far this reporting season, 75.3 percent of S&P 500 companies have exceeded profit expectations, according to Thomson Reuters data, above the long-term average of 63 percent.

Declining issues outnumbered advancers on the NYSE by 1,763 to 1,322, for a 1.33-to-1 ratio on the downside; on the Nasdaq, 1,437 issues fell and 1,245 advanced for a 1.15-to-1 ratio favoring decliners.

The benchmark S&P 500 index posted 65 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 114 new highs and 35 new lows.About 7.08 billion shares traded on all U.S. platforms, according to BATS exchange data, below the month-to-date average of 7.86 billion

Wednesday, 29 October 2014

Asian shares climbed to one-month highs on Wednesday, steered by a robust Wall Street on optimism over corporate earnings and prospects the U.S. Federal Reserve will reaffirm its willingness to wait for an extended period before raising interest rates.

European shares are expected to follow suit, with spreadbetters looking to gains of up to 0.4 percent in Germany's DAX and Britain's FTSE.

U.S. stocks rose more than 1 percent on Tuesday, with the S&P 500 coming less than two percent below its record peak set last month.

The Fed is widely expected to announce on Wednesday it will end its two-year-old bond-buying stimulus, known as quantitative easing three, as the U.S. economy continues to gather momentum.

Still Fed officials have also stressed they are in no hurry to take policy tightening a step further by raising rates from near zero levels due to subdued inflation and the poor quality of a recovery in labour markets.

"There are some views that the tapering process could be delayed to run through the rest of this year, but it is more likely that the Fed will maintain its current stance of exercising prudence in consideration of any rate hike," said Lim Dong-rak, an analyst at Hanyang Securities.

Upbeat U.S. earnings so far have also eased worries that corporate profits might be squeezed by sluggish global growth.

With 245 companies in the S&P 500 having reported earnings so far for the third quarter, 73.5 percent have beat analyst expectations, according to Thomson Reuters. Over the past four quarters, 67 percent of companies have beat estimates.

Still, Facebook Inc shocked investors after the market close on Tuesday, warning of a dramatic increase in spending in 2015 and projected a slowdown in revenue growth this quarter, falling 8.2 percent in after hours trading.

U.S. economic data published on Tuesday was mixed. But a rise in consumer confidence to a seven-year high gave stock bulls enough reason to maintain their optimism on the economic recovery.

Separate data showed new orders for capital goods by U.S. businesses fell the most in eight months in September.

The data dented the U.S. dollar against a broad range of currencies.

The euro rose to a one-week high of $1.2765 on Tuesday and last stood at $1.2738 in Asian trade. The Canadian dollar climbed to its highest level in more than two weeks against the U.S. dollar of C$1.1165.

The dollar held firmer against the yen, however, as the Japanese currency was held back by speculation that the Bank of Japan will revise down its economic growth forecast in its economic report on Friday.

The dollar traded at 108.18 yen, not far from a two-week high of 108.36 yen hit last week. It had a muted reaction to data showing Japanese industrial output rose 2.7 percent in September, slightly above market expectations.

Meanwhile, the Swedish crown managed to stabilise after sliding to four-year lows on Tuesday, knocked by a surprisingly dovish message from Sweden's central bank.

The Riksbank cut interest rates more than expected to zero and said it would delay tightening policy until the middle of 2016 as it moved decisively to tackle the risk of deflation.

Overnight, one of the factors that may hold back risk sentiment is news that the U.S. Department of Homeland Security was increasing security at government buildings in Washington and other cities because of continuing terror attack threats.

Tuesday, 28 October 2014

(Reuters) - Tougher rules may be needed to stop a repeat of the "outrageous" behaviour that has hit trust and confidence in financial markets in recent years, Bank of England Deputy Governor Minouche Shafik said on Monday.

Launching a consultation into commodity, bond and currency wholesale markets after banks were fined $6 billion (3.71 billion pounds) for rigging the benchmark interest rates, Shafik said that more changes may be needed to stop the "anything goes" attitude of traders uncovered in recent enforcement cases.

For many years the three markets were largely left to their own devices, run on a caveat emptor, or buyer beware, basis because the main participants were big banks that could look after themselves.

But fines for rigging the Libor benchmark, investigations into alleged similar behaviour in foreign exchange and concerns over parts of the bond market prompted the British government to call for a broad review of whether wholesale markets are fair and effective.

Attempted rigging of Libor at banks showed that it was not just a case of a few bad apples, Shafik said.

"Instead it seems that there were deep-rooted problems in the nature of FICC (fixed income, currency and commodities)markets that resulted in practices that would be unacceptable elsewhere," she added. "... As somebody who believes in markets, I find this behaviour outrageous."

The public consultation, open until January, asks what more, if anything, needs to be done on top of new British, European Union and global rules being brought in to stop market rigging and increase trading transparency.

"Caveat emptor has never meant 'anything goes' and certainly does not trump the obligation on a firm to act honestly, fairly and professionally," she said in a speech at the London School of Economics

KNOCK-ON EFFECTS

These wholesale financial markets had a direct effect on people's lives through products such as home loans and the cost of shopping or changing money for holidays, Shafik said.

As the memory of enforcement cases like Libor fades, the risk is that bad practice may re-emerge.

"Some say that may already be happening," Shafik said.

The 67-page consultation paper makes no specific policy recommendations but lists a series of questions under two broad headings: market structure and conduct.

There are concerns that parts of the bond market are so thinly traded that they could be abused. Trading in some instruments is also dominated by only a few big banks, opening the door to potential collusion.

New European Union rules taking effect over the next two to three years will bring the markets more tightly under the regulatory net, but more clarity on the difference between good and bad behaviour may be needed, the paper says.

Existing powers, such as imposing more capital requirements for conduct failings could be used and delays on bonuses - as seen in the banking sector - could be applied to asset managers, interdealer brokers and trading firms to make it easier to stop payouts for employees who break the rules, the paper says.

The review is being conducted jointly by the Bank of England, the Financial Conduct Authority and the Treasury, with its recommendations due to be made next June.

Changes could include turning industry best practice codes into mandatory rules, requiring more electronic trading, increasing competition in markets and bringing the trading in certain FICC markets more fully into the scope of regulation.

Monday, 27 October 2014

Twenty-five lenders in the European Central Bank’s euro-area bank health check are set to fail the regulator’s Comprehensive Assessment, according to a draft communique of the final results, seen by Bloomberg News.

One-hundred-and-five banks are shown passing the review, according to the draft statement. Of the lenders that failed, about 10 will still face capital shortfalls they need to plug, according to a person with knowledge of the matter, who asked not to be identified because they weren’t authorized to speak publicly. That figure is likely to change as talks continue before the final results are published Oct. 26, said the person.

The two-part review forms one pillar of the ECB’s effort to rekindle confidence in the euro zone after half a decade of financial turmoil. ECB President Mario Draghi has said banks need to fail to prove the losses of the past have been dealt with. After two previous European stress tests didn’t reveal problems at lenders that later failed, the ECB has staked its reputation on getting this exercise right.

“The numbers are consistent with our expectations,” said Alberto Gallo, head of European macro-credit research at Royal Bank of Scotland Group Plc in London. “It’s too early to say the exercise is credible. The key will be to see how much stress the strong banks will take, and how many of them will pass by a narrow margin.” He expects 11 banks will need to plug capital gaps after measures already taken this year.

‘Highly Speculative’

Banks that raised sufficient capital this year to cover the shortfall won’t have to find fresh funds. Lenders with a shortfall will have two weeks to submit a capital plan. Banks have until tomorrow to sign off on the ECB assessment.

“The ECB can’t comment on speculation about the outcome of the comprehensive assessment,” the ECB said in a statement. “Any inferences drawn as to the final outcome of the exercise would be highly speculative until the results are final.”

The Bloomberg Europe Banks and Financial Services Index was up 0.2 percent as of 2:15 p.m. in London today, led by Italy’s Banca Monte dei Paschi di Siena SpA, Greece’s Piraeus Bank SA and Austria’s Raiffeisen Bank International AG

Friday, 24 October 2014

Bloomberg. European shares and U.S. equity-index futures pared earlier losses. Sovereign bonds rose after a doctor in New York tested positive for Ebola. Oil slid.

The Stoxx Europe 600 Index dropped less than 0.1 percent at 9:51 a.m. in London, trimming its biggest weekly gain of the year. Standard & Poor’s 500 Index futures fell 0.1 percent after losing as much as 0.7 percent earlier. German 10-year yields slid three basis points. Brent crude slipped 0.9 percent. The yen snapped a six-day drop, and Russia’s ruble fell to a record against the dollar. The pound halted a three-day decline versus the dollar as a report showed the U.K.’s pace of economic growth slowed in the third quarter.

Almost $1.8 trillion was added to the value of global shares since Oct. 16 on speculation central banks will maintain stimulus measures. In the U.S., a New York City doctor tested positive for Ebola after returning from work in West Africa with an aid agency, a government official said. Sales of new U.S. homes dropped last month, economists estimate. Procter & Gamble Co., Ford Motor Co. and United Parcel Service Inc. are among companies reporting earnings today. On Oct. 26, the European Central Bank will give the results of its stress tests, and Brazil is scheduled to hold its presidential runoff ballot.

“Despite the economic recovery in the U.S., the overall outlook is not that strong and the Ebola scare is adding to uncertainty about growth,” said Alessandro Giansanti, a senior rates strategist at ING Groep NV in Amsterdam. “Ebola added to risk-off sentiment which underpins demand for haven assets like Treasuries.”

Thursday, 23 October 2014

The euro recovered from a two-week low against the dollar on Thursday after data showing an unexpected pick-up in euro zone business growth, though gains could be fleeting amid continued expectations of more monetary easing.

Concerns over the health of the European banking sector have also weighed on the euro, and those worries deepened after Spanish newswire Efe said on Wednesday at least 11 lenders had failed stress tests run by the European Central Bank.

The ECB, which will publish the test outcomes for 130 banks on Sunday, said final results had not yet been sent to the lenders involved, and it could not comment on individual institutions.

The euro rose to $1.2671, rebounding from a two-week low of $1.2614 hit after data showed France's preliminary composite purchasing managers' index for October falling to 48.0 from a final reading of 48.4 in September. That was well into contractionary territory.

The single currency recovered after data showed Germany's private sector grew faster in October as manufacturing rebounded, suggesting Europe's largest economy may be gaining momentum in the fourth quarter.

The euro zone composite flash purchasing managers' index, based on surveys of thousands of companies across the region and seen as a good indicator of growth, rose to 52.2, above all forecasts in a Reuters poll.

"The German numbers are promising and is a sign that things will not deteriorate. The weak French numbers do not surprise, and net-net, it does little to expectations that the ECB will have to step in with further easing," said Richard Falkenhall, currency strategist at SEB.

"We expect the euro to grind lower and hit $1.15 in a year's time. That forecast factors in tightening by the Federal Reserve next year and the ECB asset purchases, including buying of government bonds."

The euro had weakened this week after Reuters reported on Tuesday that the ECB was considering buying corporate bonds on the secondary market and may decide on the matter as soon as December.

NORWEGIAN CROWN RISES

The euro fell 0.5 percent against the Norwegian crown , after Norway's central bank sounded less dovish after a policy meeting. Earlier, Norges Bank kept interest rates unchanged at 1.5 percent as expected and said that the recent fall in oil prices had increased uncertainty.

Susanne Galler, currency strategist at Jefferies, said that for investors to turn bullish on the Norwegian crown, crude oil prices needed to stabilise.

Norway is a big exporter of crude oil and the currency has a relationship with oil prices. With crude prices dropping sharply in the past few months, the crown has come under pressure.

The dollar remained on the back foot against a basket of major currencies, trading at 85.699.

The dollar has lost ground in recent weeks as concerns about slowing global growth and muted inflation prompted investors to trim bets that the Fed will raise interest rates soon after an expected end to its bond-buying stimulus later this month.

"Market players are hesitant to build positions ahead of next week's Federal Reserve meeting, especially as officials have sent dovish signals recently," said Junichi Ishikawa, market analyst at IG Securities in Tokyo.

Earlier, a survey showed China's factory sector grew a shade faster in October, but the details underscored a still-shaky economy.

The New Zealand dollar lost nearly 1 percent to $0.7856 in the wake of softer-than expected inflation data that could give the Reserve Bank of New Zealand room to further delay its next interest rate hike.

Tuesday, 21 October 2014

(Reuters) - Coca-Cola Co (KO.N) and Chipotle Mexican Grill (CMG.N) were among the most active names of Tuesday's premarket session, with both stocks falling on heavy volume.

Chipotle lost 5.2 percent to $618.80 before the bell a day after the burrito chain reported another acceleration in quarterly restaurant sales growth but signaled that such momentum couldn't last forever.

The stock has been a trading favorite this year, up about 23 percent in 2014, based on Monday's closing price. That easily outpaces the S&P 500's rise of about 3 percent.

Coca-Cola lost 3 percent to $41.97 after the Dow component said it expects to be below its long-term earnings growth outlook for the year, with currency exchange rates serving as a headwind.

Also moving on results was Verizon Communications Inc (VZ.N), which rose 0.7 percent to $48.80 after reporting revenue that was modestly above expectations.

The overall market was higher, with U.S. stock index futures pointing to a fourth straight session of gains. Technology shares were especially poised for outperformance following strong results from both Apple Inc (AAPL.O) and Texas Instruments Inc (TXN.O).

Apple rose 1.9 percent to $101.68 in heavy premarket trading a day after it reported revenue that topped expectations, helped by strong sales of its iPhone line. It also gave a strong outlook for the holiday quarter.

Monday, 20 October 2014

After the most volatile week markets have seen in years, investors will look to a slew of company earnings from major corporations this coming week to settle nerves — but will the companies involved produce the positive outlook that traders are looking for?

Last week, the S&P 500 fell for the fourth successive week amid concerns about a slowdown in the global economy, a European debt crisis that refuses to go away, and the Ebola virus.

Things got so jittery — with a global slowdown causing expectations of inflation to fall too low — that St. Louis Fed president James Bullard said that perhaps the Federal Reserve should consider delaying the end of its bond buying stimulus program.

With an eye on global demand, investors will fret over big economic news from China on Tuesday when, among other things, an update could show that China’s third quarter economic growth fell to the slowest pace since 1999.

U.S. existing home sales on Tuesday and consumer price data on Wednesday will also be watched closely.

Net income attributable to common shareholders rose to $2.14 billion, or $4.57 per share, from $1.43 billion, or $2.88 per share, a year earlier.

Analysts on average had expected earnings of $3.21 per share, according to Thomson Reuters I/B/E/S.

Revenue from bond-trading, a notoriously volatile business, increased 74 percent to $2.17 billion as strong U.S. economic data, stimulus measures by the European Central Bank, and the surprise exit of trading superstar Bill Gross from giant bond-trading firm Pimco jolted what had been a listless market.

Goldman's fixed-income, currency and commodities (FICC) business has been on a declining trend since 2009 as new rules discourage banks from trading on their own book, and many have wondered whether the industry will ever truly rebound.

But Goldman says it sees a long-term future in the business as rivals scale back or quit, leaving it to fill the gap.

The FICC business contributed about 26 percent of overall revenue in the latest quarter, compared with about 40 percent of annual revenue in 2009 and 25 percent last year.

"It is a positive indication that the long drought on the trading floor may be nearing an end," said Chris Kotowski, an analyst with Oppenheimer & Co.

The bank, also one of the biggest beneficiaries of the resurgence in equity capital markets this year, said revenue from equity underwriting rose 54 percent to $426 million.

Goldman ranked No. 1 for both equity underwriting and advisory services in the first nine months of 2014, according to Thomson Reuters data, helped by its work on big deals including the $25 billion IPO of Alibaba Group Holding Ltd (BABA.N).

Goldman's shares were down 2.7 percent at $172.45 in premarket trading. Global equity markets have been on a slide in recent days on worries about the health of the global economy, and bank shares have been hit hard.

Russia’s ruble wiped out its first gain in nine days after interventions ING Groep NV says have topped $11 billion failed to stem the rout as oil slides.

The currency retreated 0.7 percent to 45.8845 against the central bank’s dollar-euro basket at 11:19 a.m. in Moscow, set for a record low on a closing basis. It strengthened 0.6 percent yesterday after the government announced a plan to start auctioning foreign currency to address a domestic dollar and euro shortage caused by sanctions over Ukraine. Ten-year government bonds fell, approaching a five-year low.

The world’s biggest energy exporter is eating into its $454.7 billion reserves as oil slumps to a four-year low in London and penalties block companies from U.S. and European debt markets. The central bank said today it sold $2.3 billion of foreign currency on Oct. 14. That brings this month’s total to about $11 billion, including yesterday, ING’s Russia chief economist Dmitry Polevoy said by e-mail.

“We are back to tracking sliding oil prices,” Vladimir Osakovskiy, the chief economist for Russia at Bank of America Corp. in Moscow, said in e-mailed comments. “The rebound yesterday on the back of upcoming support measures, announced by the Finance Ministry, proved to be short-lived, as these measures are yet to be implemented and the conditions for these are yet to be outlined.”

The ruble had its biggest one-day gain versus the dollar in three weeks yesterday as Russia’sFinance Ministry said it would start so-called deposit auctions to give banks access to $3 billion, according to Svetlana Nikitina, aide to Finance Minister Anton Siluanov.

Cash Shortage

The initiative, which followed an earlier central bank announcement to start repurchase agreements in foreign currencies, helped reduce bets for interest-rate increases. Three-month forward-rate agreements fell to 135 basis points from a six-year peak of 200 basis points two days earlier.

Russian companies are facing a cash crunch as they search for ways to meet $55 billion of debt maturities through December, according to central bank estimates. Brent crude fell for a fourth day, losing 0.9 percent to $83 per barrel today, the lowest level in almost four years.

The yield on 10-year government bonds rose two basis points to 9.87 percent. The premium to swap rubles into dollar cash flows fell seven basis points to negative 287, indicating traders are willing to pay a near-record premium to secure hard currency.

Providing Cash

“We can’t yet expect any increase in central bank interventions,” Vladimir Evstifeev, an analyst at Bank Zenit in Moscow, said in e-mailed comments. “The regulator will most likely expand the suite of foreign-currency swaps and continue to tighten monetary policy.”

Yesterday’s appreciation enabled the Bank of Russia to slow the pace at which it lowers the floor of its basket to 25 kopeks at 45.95, compared with a 35 kopek move a day earlier, data on its website showed today. The central bank releases its intervention data with a two-day lag.

The monetary authority, which has said it plans to adopt a free float by next year, currently allows the currency to trade within a 9-ruble-wide corridor. When the ruble weakens past the boundary, the bank spends $350 million to defend it before shifting the band by 5 kopeks, according to its guidelines. It repeats the process each time the currency falls by 5 kopeks.

Wednesday, 15 October 2014

The S&P 500 and Nasdaq ended up slightly on Tuesday, breaking a three-day string of declines that marked their worst losses since 2011, while the Dow finished lower for a fourth session on lingering worries about global demand.

While the S&P closed in positive territory, it was well off its session highs of more than 1 percent and did little to put investors at ease about the market's recent selloff.

The benchmark index has lost 6.6 percent since its Sept. 18 record closing high and is now up just 1.6 percent for the year, while the Dow is down 1.6 percent since Dec. 31. For a factbox on the market's selloff, see

"Today's action is typical of a market that hasn't completed its downward course," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

"In order for this market to escape further declines, we would have to see the market begin to stabilize and not slip in and out of the plus and minus column consistently."

The selloff has been driven by a host of negative influences including the potential spread of Ebola, the effect of global economic weakness on U.S. earnings and plunging oil prices.

The S&P energy index .SPNY fell with oil prices, dragging down equities late in the session. The index, which ended 1.2 percent lower for the session, is now down 20.1 percent from its June high, putting it in bear market territory.

Despite some early upbeat corporate results, concerns remain about the effect of a stronger dollar on global demand and U.S. earnings, Cardillo said.

Citigroup (C.N), up 3.1 percent at $51.47, was among the top boosts to the benchmark S&P index after the bank posted better-than-expected quarterly results and said it would pull out of consumer banking in 11 markets.

After the close, shares of Intel (INTC.O) gained 1.4 percent to $32.60 following its results and outlook, which included a rosy fourth-quarter forecast.

Volume has picked up with the volatility in the markets in recent days. About 9.2 billion shares changed hands on U.S. exchanges, above the 8.4 billion average for the last five sessions, according to data from BATS Global Markets.

The largest percentage gainer on the S&P 500 was Delta Air Lines (DAL.N), up 6.1 percent, while the largest percentage decliner was Newfield Exploration (NFX.N), down 5.7 percent.

The largest percentage gainer on the Nasdaq 100 was NXP Semiconductor (NXPI.O), which rose 5.0 percent, while the largest percentage decliner was Gilead (GILD.O), down 4.2 percent.

Among the most active stocks on the NYSE were Brazil's Petrobras (PBR.N), down 0.98 percent to $17.10. Intel was among the most actively traded on the Nasdaq.

Advancing issues outnumbered declining ones on the NYSE by 1,873 to 1,196, for a 1.57-to-1 ratio on the upside; on the Nasdaq, 1,689 issues rose and 1,027 fell.

Monday, 13 October 2014

European stocks reversed early losses on Monday as airline shares gained after crude oil prices fell to near a four-year low, though broad dollar weakness and a jump in gold signaled investor concern over global economic health.

Stocks opened the week on a negative note. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 0.5 percent.

European shares opened lower but investors found solace in the expected impact of cheaper oil on airlines. Germany's Lufthansa (LHAG.DE) rose 3.3 percent and Air France-KLM (AIRF.PA) were up 3.8 percent. This helped lift the pan-European FTSEurofirst 300 index .FTEU3 0.3 percent, though some saw bargains after a fall of about 8 percent since mid-September.

"The sell-off in global stocks and crude prices has clearly been flow-driven, and such a move brings good buying opportunities for long-term investors like us," said Evan Bauman, a portfolio manager at ClearBridge Investments, which has $36 billion in assets under management.

"We've been holding cash in the past few months, about 13-14 percent of the portfolio, expecting a pull-back. With the market's recent retreat, we've been putting a bit of this money back to work."

Wall Street looked set to open higher, with S&P e-mini stock index futures ESc1 up 0.4 percent. U.S. bond markets are closed for the Columbus Day holiday.

The MSCI All-Country World index .MIWD00000PUS was up 0.2 percent. It had earlier dropped to a seven-month low and turned negative for the year.

Investors have been cutting their exposure to riskier assets on worries about the effect of an end to U.S. Federal Reserve's bond-buying stimulus later this month, mounting risks of recession in the euro zone and a floundering Japanese economy.

The IMF's member countries called on Saturday for bold action to bolster the economic recovery.

The Fund last week cut its global growth forecast for the third time this year.

The euro zone, without growth and flirting with deflation, faces the prospect of recession in its economic powerhouse, Germany. Adding to the low mood, ratings agency Standard & Poor's revised on Friday France's credit outlook to negative and cut Finland's triple-A rating to AA+.

ABUNDANT SUPPLY

A combination of abundant supply and concerns about global demand has crushed crude oil prices in recent weeks. Brent crude futures for November LCOc1 last traded at $88.14 yen, having touched $87.74 in Asian trade, its lowest since December 2010, although the Chinese trade data helped pare losses.

Kuwait said OPEC was unlikely to cut production to support prices, while Saudi Arabia has privately told oil market participants it could be comfortable with $80 for oil.

"Judging by the latest comments from Kuwait and Saudi Arabia, we expect more near-term downside ahead for oil prices amidst the ongoing global growth scare," said Gordon Kwan, head of oil and gas research at Nomura.

Spot gold XAU= rose to a near four-week high of $1,237.30 an ounce and last stood at $1,227.90, up 0.4 percent

Friday, 10 October 2014

The S&P 500 on Thursday posted its largest percentage decline in six months on concerns about the strength of the global economy and its effect on corporate earnings.

The slide dragged the benchmark to below its 150-day moving average for the first time since November 2012.

The selloff, which put the S&P 500 at its lowest since Aug. 7, followed weak data from Germany, Europe's largest economy, and comments from a Fed official who suggested investors had unrealistic expectations about the Fed's eventual rate increase.

German exports in August fell the most since January 2009, and reports earlier in the week showed steep drops in industrial orders and output.

"Investors are focused on the uncertainty about the economy," said Michael Yoshikami, chief executive and founder of Destination Wealth Management in Walnut Creek, California.

Adding to market jitters, St. Louis Federal Reserve Bank President James Bullard said he was concerned by a disconnect between the market's view of the Fed's rate-increase path and the central bank's own view.

"The markets are making a mistake," said Bullard, a non-voting member of the FOMC who is, however, seen by investors as a bellwether among Fed officials.

Expectations of a more dovish Fed had triggered a rally in stocks on Wednesday, but those gains disappeared in Thursday's trading.

Market participants said the end of the Fed's third round of quantitative easing this month was also bearish as it takes away one of the pillars of the five-year bull market.

"QE3 ending is one positive catalyst taken away, a tailwind turning into a headwind," said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

"Tighter policy is the path we’re on and we should be," he said.

The Dow Jones industrial average .DJI ended down 334.97 points, or 1.97 percent, at 16,659.25; the S&P 500 .SPX dropped 40.68, or 2.07 percent, to 1,928.21, and the Nasdaq Composite .IXIC fell 90.26, or 2.02 percent, to 4,378.34.

The Russell 2000 .TOY index of small-cap stocks fell 29.13, or 2.66 percent, to close at 1,067.99.

Energy shares .SPNY were by far the weakest on the day, dropping 3.7 percent in their biggest one-day decline since April 2013. U.S. crude oil prices CLc1 settled at their lowest since December 2012 and continued to fall in post-settlement trading.

The S&P 500 posted back-to-back intraday moves of more than 40 points for the first time in three years. The CBOE Volatility Index .VIX jumped more than 24 percent to close at its highest since early February.

The largest percentage gainer on the S&P 500 was Ventas Inc (VTR.N), which rose 1.3 percent, while the largest percentage decliner was Gap Inc (GPS.N), down 12.5 percent.

On the Nasdaq 100 the largest percentage gainer was Apple Inc (AAPL.O), up just 0.2 percent, while the largest percentage decliner was VimpelCom Ltd (VIP.O), down 5.9 percent.

Among the most active on the NYSE were Bank of America (BAC.N), down 3.1 percent at $16.59; Petrobras (PBR.N), up 1.57 percent to $16.77; and AMD (AMD.N), down 10.06 percent at $2.95.

GT Advanced Technologies (GTAT.O), up 17.3 percent to $1.29, and Apple were among the most actively traded on the Nasdaq.

Declining issues outnumbered advancing ones on the NYSE by 2,726 to 364, a 7.49-to-1 ratio; on the Nasdaq, 2,314 issues fell and 387 advanced, a 5.98-to-1 ratio.

The benchmark S&P 500 index showed 22 new 52-week highs and 19 new lows; the Nasdaq Composite recorded 24 new highs and 215 new lows.

Thursday, 9 October 2014

LONDON, Oct 9 (Reuters) - European shares bounced back on Thursday from the previous session's two-month lows on expectations the U.S. Federal Reserve will not start hiking interest rates until the economy is strong enough to absorb the move.

The FTSEurofirst 300 index of top European shares was up 1 percent at 1,332.34 points by 0752 GMT, after falling 0.8 percent in the previous session.

The market rallied following the release late on Wednesday of the minutes of the Fed's Sept. 16-17 meeting. The Fed expressed concern the rising dollar could slow a needed rebound in inflation and highlighted economic turmoil in Europe and Asia, another factor behind its stance towards keeping an accommodative policy for the near future.

"Overall the Fed still seems to be very cautious and that might lend some support to equity markets. It has to sharpen its forward guidance in the next policy meeting, given the problems that we still see in the global economy," Gerhard Schwarz, head of equity strategy at Baader Bank in Munich, said.

"The market probably will find it hard to get a big support coming from fundamentals as we still have ongoing problems in Europe. But if earnings for the third quarter are not as bad as feared, then that could help the market to gain faith again."

Aluminium major Alcoa kicked off the U.S. reporting season on Wednesday by posting a stronger-than-expected increase in third-quarter profit.

The European earnings season will gather pace in the third week of October. Analysts said the recent sharp slide in the euro and commodity prices is set to provide tailwind for European firms struggling against economic weakness, and soon break a streak of earnings downgrades that has already lasted 3-1/2 years.

Despite the day's rebound in European equities, the sharp sell-off started in mid-September is starting to have a negative impact on capital market activities. French energy services firm Spie < SPIE.PA> canceled its IPO on Thursday, blaming 'volatile market conditions'.

Analysts said the share market remained vulnerable following Europe's poor economic outlook. The FTSEurofirst 300 index had fallen 6.5 percent over the past three weeks before Thursday's rebound.

Figures showed on Thursday German exports slumped by 5.8 percent in August, their biggest fall since the height of the global financial crisis in January 2009, in yet another sign that Europe's largest economy was faltering.

Among individual sharp movers, miners Fresnillo and Randgold Resources rose 5.2 percent and 7 percent respectively, with traders citing dovish Fed minutes as being more supportive for the gold price.

Wednesday, 8 October 2014

New York plans to form the first U.S. state version of the federal Export-Import Bank to help businesses expand overseas, Governor Andrew Cuomo said on Tuesday, in a vote of confidence in a credit agency that critics have decried as corporate welfare.

"We're going to capitalise it with $35 million to start," Cuomo said at a trade summit in New York, according to a recorded version of his speech. "We will have a real vehicle that can facilitate companies that want to make exactly this transaction."

The development fund would help small and medium-sized companies increase exports, his office said in a statement, without providing a time frame.

New York will partner with the U.S. Ex-Im bank to connect creditworthy small businesses to export financing with short-term loans of up to $500,000, the statement said.

"The states are in competition and I want jobs," Cuomo told reporters after announcing the imitative, according to a recording of the comments provided by his press office.

"For companies to go global, it is difficult," Cuomo said. "It is (also) not easy to move an existing company from overseas to the U.S."

The Ex-Im bank recently had its mandate extended by Congress through June 2015, in a compromise between critics who see it as corporate welfare and aimed to close it, and supporters who called a longer extension.

"The Federal Ex-Im bank is undergoing Congressional scrutiny," Cuomo said, adding the scrutiny was focussed on which companies benefit. "The concept of facilitating international trade, is exactly right," he said.

Tuesday, 7 October 2014

(Reuters) - U.S. stocks fell sharply at the open on Tuesday, pressured by a second straight day of weak data out of Germany, the euro zone's largest economy.

The Dow Jones industrial average .DJI was falling 137.4 points, or 0.81 percent, at 16,854.51, the S&P 500 .SPX was losing 14.83 points, or 0.75 percent, at 1,949.99 and the Nasdaq Composite .IXIC was dropping 38.49 points, or 0.86 percent, at 4,416.31

Friday, 3 October 2014

(Reuters) - Stocks worldwide were lower on Thursday after European Central Bank President Mario Draghi failed to provide nervous markets with a specific stimulus program for the euro zone's shaky recovery, while U.S. markets steadied after a recent sell-off.

Although Draghi reiterated that the ECB remained ready to use further unconventional policy tools if needed, a lack of specifics on the bank's plan to buy secured debt left investors unimpressed.

Losses in Europe were steep, with the FTSEurofirst 300 index falling 2.4 percent. But on Wall Street, the S&P 500 managed to barely halt a three-session losing skid, ending the session flat after falling to its lowest level since Aug. 8.

"People don’t need to panic, so you traded below your 50-day moving average - you are still far above your 200-day moving average," said Keith Bliss, senior vice-president at Cuttone & Co in New York.

"So you are seeing buyers just finally saying 'it is time to step in.'"

Draghi repeated that the ECB hopes its recently announced plans will add a trillion euros to its balance sheet. But poor demand for a new round of cheap loans last month is raising the pressure for it to be more aggressive.

The Dow Jones industrial average fell 3.66 points, or 0.02 percent, to 16,801.05, the S&P 500 gained 0.01 points, or flat, to 1,946.17 and the Nasdaq Composite added 8.11 points, or 0.18 percent, to 4,430.20.

The euro rose 0.3 percent, its biggest gain against the dollar in two weeks.

"The euro rose not because of what Draghi said, but what he didn't say," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "We haven't heard any meaningful language regarding an increase in the scope of assets to be purchased, in other words, outright quantitative easing."

Investors have become more cautious recently as they digest economic data and other news. Data on Wednesday showed that German factory activity shrank for the first time in 15 months and China's manufacturing sector is barely growing. The first diagnosed case of Ebola in the United States added to the skittish investment climate.

MSCI's 45-country world stock index fell 0.6 percent to give the index its first four-day skid in two months, but did cut declines after it hit a five-month low of 407.18.

Oil prices remained under pressure after price cuts from top producer Saudi Arabia added to a supply glut. Brent crude oil settled down 0.8 percent at $93.42 after earlier hitting a low of $91.55. U.S. crude settled up 0.3 percent at $91.01 after it earlier fell as low as $88.18, its lowest level in almost 18 months. [O/R]

Markets are also grappling with the imminent end to the Federal Reserve's massive monthly bond-buying program, which is raising questions about the timing of the Fed's first interest rate hike in years.

The risk-averse global mood pushed 10-year U.S. Treasury yields - the benchmark for world debt markets - to as low as 2.38 percent on Wednesday. But on Thursday the 10-year pared losses and was last down 10/32 in price to yield 2.4357 percent. [US/]

Wednesday, 1 October 2014

The London Metal Exchange (LME) announced Monday it will combine current transaction fees into a single trading fee beginning on 1 January 2015, with an average increase of 34%.

The new simplified tariff will provide an “all-in” transaction fee in a single currency, the USD, the exchange said in a statement.

The metals exchange will offer a “significant discount” on trades transacted on the Ring, in order to encourage more business on the floor, it added.

“Our new tariff is integral to our evolution into a truly commercial global exchange and underpins our continued investment and our next phase of expansion following the successful launch of LME Clear last week,” said Garry Jones, LME CEO and HKEx Co-Head of Global Markets.

“The new LME tariff is competitive and ensures we can continue focusing on innovation and offering users the highest levels of service,” added Mr. Jones.

The fee increase “is a balance between a fair return for the investors and fair transaction costs for the participants,” CEO Jones, said at a press conference in London Monday. “The LME, as was just 3 yrs ago, would not survive in today’s environment.”

The LME last year handled 171.1-M futures and options contracts in aluminium to tin worth $14.6-T. The bourse is raising charges, adding new products and opened its own clearinghouse to boost revenue. During takeover bidding in Y 2012, HKEx pledged to freeze charges until January 2015.

The 137-yr-old exchange is the world’s biggest industrial metals market. It was purchased by Hong Kong Exchanges and Clearing in July 2012 for GBP 1.4-B (about US$ 2.3-B).

Trading on the LME can be done in 3 main ways: through open outcry, a telephone system between member companies or the LME Select, an electronic trading platform.

The LME is a non-ferrous exchange, meaning that Iron and Steel are not traded on the exchange.